Battery firm backed by federal stimulus money files for bankruptcy

An electric-car-battery company that won a $249 million stimulus grant filed for bankruptcy Tuesday, reigniting Republican presidential nominee Mitt Romney’s criticism that the Obama administration wasted taxpayer money by subsidizing clean energy companies.

The company has received $130 million of its federal grant, which it used to build a Michigan plant to manufacture lithium ion batteries for electric cars. The company said it would create thousands of jobs.

But the start-up was besieged by problems, including malfunctions and fires in its batteries and a heavy reliance on a single troubled buyer, carmaker Fisker Automotive.

“A123’s bankruptcy is yet another failure for the president’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work,” Romney campaign spokeswoman Andrea Saul said in an e-mailed statement.

A123 is the fifth prominent clean-energy firm the Obama administration subsidized with loans or grants that has filed for bankruptcy protection, joining solar firms Solyndra and Abound Solar, energy firm Beacon Power, and battery company Ener1. Solyndra, whose lead investor was linked to a key Obama donor, is often cited by Republicans as a prime example of “cronyism” in President Obama’s stimulus program.

Several leaders in the electric-car and battery industry warned last year that demand would fall far short of Obama’s goal of 1 million electric cars on the road by 2015, and would not justify all the plants that stimulus grants were financing.

A123’s troubles surfaced last year. Fisker Automotive fell two years behind its timetable in producing its electric car. The Energy Department had agreed to lend Fisker $529 million but in 2011 refused to release funding beyond the $193 million that had gone out.

A123 chief executive David Vieau said in a December interview with The Washington Post that the company was hitting the same “minor bumps in the road” that every start-up experiences.

“We have the orders, customers and factories,” Vieau said. “That’s not conjecture, it’s a business plan. We will be fully busy in 2013.”

Obama had touted A123 as a job creator and illustration of his stimulus program at work. He made a highly publicized call to A123’s Livonia plant for its 2010 opening and said the plant signaled “the birth of an entire new industry in America.”

An Energy Department spokesman said that the company’s fall is natural in a free market, and that Johnson Controls, which makes batteries and energy systems, has bought A123’s factories.

“In an emerging industry, it’s very common to see some firms consolidate with others as the industry grows and matures,” Dan Leistikow wrote in an e-mail.

A Johnson Controls spokesman said the firm intends to use A123’s technology but does not know specifically how it will use its battery plant. Johnson Controls won a $299 million stimulus grant to build two battery plants. It is running one at half-capacity and has put off plans to build the second.

Carol Leonnig is an investigative reporter at The Washington Post, where she has worked since 2000. She won the 2015 Pulitzer Prize for her work on security failures and misconduct inside the Secret Service.